The History of EDI
EDI first came about in the U.S. transportation industry in the 1960′s. The purpose of EDI was to eliminate the disruption of working between as many 3 and 4 unique operations systems and create standardization and between customer and vendor.
The practice was quickly embraced by U.S. grocers and then the automotive industry. Today, each major industry segment is a driver of Compliance EDI which is the standardized flows of electronic documents that contain pertinent data thus streamlining and enhancing the supply chain. .
The retail industry is a major force behind compliance EDI. Retailers such as Wal-Mart, Home Depot, JC Penney, Price Costco, and Sears demand compliance from their suppliers. These companies, and others, keep “score cards” for their vendors and EDI capability counts as points toward you goal.
So, we’ve reviewed what EDI means for you, but what does it mean for the retailer? For these companies, EDI means:
- Better information flow
- Improved inventory management
- Reduced costs
- More accurate accounting
Companies are able to save millions of dollars at the administration level by implementing EDI. They are able to squeeze the cost from their operations which drives down the price of goods for consumers, who are ultimately you and I.
Not to get too technical so early on but it’s important to note that EDI is based on a set of standards such as X12 and EDIFACT, which are used for document content and structure. Each industry publishes its own set of guidelines on how to implement these standards. X12 is the primary standard used in the US, while EDIFACT is the primary standard in Europe. Check out the next section on “How EDI Works” to learn more!